Engineering Production Functions¶
Chenery, H. B. (1949). Engineering Production Functions. Quarterly Journal of Economics, 63(4), 507-531.
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Primes¶
- Economies of Scale
- In process industries the sublinear scaling has been quantified empirically — Chenery's (1949) engineering production functions formalized the cost-capacity exponent for chemical and process plants — with plant capital cost scaling roughly as \(C \propto q^{0.6}\), capital cost per unit falling with the 0.4 power of capacity.
This sourceFoundational paper constructing production/cost functions from engineering calculations rather than statistical plant observations, formalizing the cost-capacity exponent (the six-tenths-rule family) for process plants
- In process industries the sublinear scaling has been quantified empirically — Chenery's (1949) engineering production functions formalized the cost-capacity exponent for chemical and process plants — with plant capital cost scaling roughly as \(C \propto q^{0.6}\), capital cost per unit falling with the 0.4 power of capacity.
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